LMEWEEK-Auto sector to drive continuing aluminium demand -Novelis

HAMBURG, Nov 2 (Reuters) - Global demand for rolled aluminium products is expected to remain strong in next year thanks largely to the automotive sector, leading producer Novelis said on Thursday.

The trend towards electric cars is also likely to increase the aluminium content of vehicles as carmakers seek to maximise battery range, said Emilio Braghi, senior vice president and Europe president at Novelis, the world’s largest maker of rolled aluminium products.

“We expect our auto shipments to continue to grow as customer demand remains strong and current demand outstrips supply,” Braghi said in an LME Week interview. “In total our automotive sheet shipments were up 16 percent in the first quarter of our fiscal year 2018.”

“Sales of new vehicle models containing Novelis aluminium, including the Ford F-150 pick-up truck, have been very strong. In North America, production of the new 2017 Ford Super Duty series of trucks was ramped up successfully.”

United States-based Novelis delivered 785,000 tonnes of rolled products worldwide in its financial first quarter, up 4 percent year on year, including the 16 percent rise in automotive deliveries.

In Europe, it has production and recycling operations in Germany, Italy, Britain, France and Switzerland.

In 2014 Novelis opened a $258 million aluminium recycling plant in Germany to produce an annual 400,000 tonnes of aluminium from scrap. In 2015 an additional production line was opened in Germany, producing up to 240,000 tonnes of aluminium sheet a year for the automotive industry.

“Our additional capacity in Germany is poised to meet increasing demand from Jaguar Land Rover following the rapid growth in sales of new aluminium-intensive vehicles, including the new F-PACE sports utility vehicle,” Braghi said.

“In China, increasing local demand for customers like Chery JLR and FAW-VW will drive shipment growth over the next several quarters out of our facility in Changzhou.”

Novelis, a unit of India’s Hindalco Industries, expects electro-mobility to create more demand.

Significant steps are being made in increasing the number of electric vehicles, which will require large amounts of aluminium to meet production goals, Braghi said.

“An important launch is the first electric model of Jaguar Land Rover, the I-PACE. Novelis will also supply Chinese electric vehicle manufacturer NIO with structural components for its aluminium-intensive electric SUV.”

Elsewhere, growth in demand for can production is strongest in developing markets, but aluminium continues to gain market share in established regions including Europe.

“Despite good demand and the sophistication required to produce can sheet, maturing markets are quite competitive,” Braghi said, identifying excess capacity, imports from Russia and Asia, economic weakness and geopolitical instability among the key challenges. (Reporting by Michael Hogan; Editing by David Goodman)